Cabinet Office permanent secretary Sir Alex Chisholm and Treasury perm sec James Bowler have been urged to be more transparent over the challenges government faces in battling fraud and corruption, following a report by watchdog MPs.
Public Accounts Committee chair Dame Meg Hillier also criticised Chisholm and Bowler for being vague about future investment to recover funds lost to fraud.
Her criticisms came in a letter to the perm secs published last week following PAC's September 2023 report Tackling fraud and corruption against government.
The report said that on top of roughly £16.4bn lost to tax and benefit fraud in 2022-23, the government could have lost up to £28.5bn to fraud and error, but did not know "exactly where or how".
Hillier said at the time that the government was "flying blind on the levels of fraud and corruption perpetrated against it". Among their recommendations, committee members called on the newly created Public Sector Fraud Authority to produce “an annual strategic intelligence report" on the level of fraud and corruption across government.
While the government's Treasury minutes response to the report accepted nine of its 10 recommendations, ministers pushed back against the call for the annual strategic intelligence report from PSFA – which is overseen by the Cabinet Office and the Treasury.
They argued that while the government would "seek to be transparent" about fraud and corruption, it would not publish "any information that could increase the fraud threat by showing how attacks could be executed".
The Treasury minutes response said PSFA was commited to creating a "high-risk fraud portfolio" that would provide a strategic intelligence picture of the highest risk areas for sharing across government and would continue to publish Fraud Landscape reports and bulletins. But it rejected the recommendation for the publication of a separate strategic intelligence report.
Hillier said the decision was disappointing, and that she doubted setting out an appraisal of challenges faced by government and its capacity to deal with them would aid the work of potential fraudsters.
"It is a reasonable expectation that you provide transparency on where the strategic fraud risks lie and on the adequacy of government’s response to these risks," she said in her letter to Chisholm and Bowler.
"I am not convinced that doing so would inevitably increase the fraud threat. I would welcome suggestions on how you could fulfil the spirit of this recommendation, if not through an annual strategic intelligence report."
Hillier asked Chisholm and Bowler whether future Fraud Landscape reports could be enhanced to "give a proper strategic view" on fraud risk across government and whether resources are being effectively deployed.
She added: "If there is a real concern about publishing such a report I would welcome a discussion about the committee having access to a report on reading room terms."
Elsewhere in her letter, Hillier said that although the government had accepted PAC's recommendation that the Treasury should work with departments to recover as much money lost to fraud as possible, ministers had been short on detail in relation to funding for the work.
"While I welcome your commitment to increase counter-fraud investment, you have been vague in how you will do so beyond previously announced initiatives," she said.
Hillier said that almost all of the £1bn Chisholm and Bowler said would be spent on tackling fraud at an evidence session for last year's report had been invested in the Department for Work and Pensions.
"You note in your response that HM Treasury will continue to invest in fraud recovery initiatives with 'reasonable levels of investment return' on a case-by-case basis." she said. "But you have not explained why you are not already investing in recoveries in other departments, set out your expectations for how much fraud can be recovered, nor your criteria for assessing when to invest more on specific initiatives.
"As is, your answer does not give me confidence government will recover fraud and error from the pandemic to the maximum extent possible."
Hillier gave Chisolm and Bowler until 27 March to respond to her concerns.
Chisholm is due to step down as Cabinet Office perm sec and civil serivce chief operating officer next month.